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An individual retirement account (IRA) can be used as a supplement to employer-sponsored retirement planning solutions such as a 401(k) or it could also be opened by self-employed individuals to start building a retirement fund through a combination of periodical contributions and investment gains.
The main advantage of an IRA is that it enables the holder to defer the payment of any applicable capital gain taxes, which results in higher returns over time through the magic of compounding.
When it comes to opening and managing a retirement account, investors can either choose to let a professional handle their investment portfolio or they can take matters into their own hands. They can do this by opening a self-directed IRA (SDIRA) through which they can build a portfolio without the assistance of a third party. This instrument will also enable them to invest in assets beyond stocks, ETFs, mutual funds, and bonds that can be held in a traditional IRA or Roth IRA.
In the following review, we will present you with nine different companies that currently offer self-directed IRAs.
Best Self Directed IRA Companies
The following providers offer self-directed IRA accounts but they differ from each other in their pricing, portfolio of available instruments, and other relevant aspects.
We will present you with a summary of the main features of their service along with an overview of their fees and commissions and our take on what is it that makes them stand out from others. Check out Best Roth IRA Accounts and Best Traditional IRA Accounts guides for other options.
With nearly 40 years of experience providing its services as an IRA-approved custodian and broker, Equity Trust emerges as one of the leading providers of self-directed IRA accounts in the United States. They enable investors to access a wide range of alternative investment vehicles including private equity, real estate, and precious metals.
- Access to more than 12 different asset classes including real estate investment trusts (REITs), private equity funds, cryptocurrencies, forex, and mutual funds
- Cutting-edge account management system – myEQUITY – through which investors can easily manage their portfolio of investments
- Wide range of available educational materials to help investors in learning the advantages and downsides of the multiple investment alternatives offered by the firm
- The company offers the possibility of opening a custodial account for kids
- Straightforward fee structure and competitive pricing
What We Like About Equity Trust
The wide range of available investment vehicles is without a doubt one of the things that make Equity Trust a great choice for those who are looking to build a diversified portfolio for their IRAs.
Meanwhile, the company’s straightforward pricing allows investors to easily estimate the impact that these fees will have on their portfolio returns.
Fees & Commissions
Equity Trust charges an annual fee that varies depending on the client’s portfolio value, starting with a $205 annual fee for IRA accounts with a balance equal to or lower than $14,999.
Additionally, the company charges a $50 account set-up fee and a $25 fee if the application is submitted online, while the fee is $75 if a paper application is submitted.
Finally, if an investor would like to close his account, there is a termination fee of $100 per asset class for partial terminations and a one-time $225 fee if the investor fully liquidates and closes his/her account.
Alto was launched in 2018 as an alternative to those looking to expose their IRA funds to alternative asset classes.
However, along with the classical alternative — such as real estate, forex, and precious metals — the company provides investors with access to startup funding rounds and loan portfolios while allowing its clients to partner with other Alto users to build up a pool of capital to access certain investment opportunities. Read our fill Alto IRA review to learn more.
- Multiple types of IRA are supported including traditional, Roth, and SEP.
- Networking opportunities available for those with small amounts of capital available to be deployed.
- Access to exotic asset classes such as art, venture capital, and cryptocurrencies
- Low monthly subscription fees
- Networking opportunities resulting from partnering with other fellow investors
What We Like About Alto
Alto has partnered with a wide range of third-party providers that give investors access and an effortless experience when stepping into the realm of alternative investment.
This includes companies like AngelList, a platform that connects venture capitalists with promising startups, and Masterworks, a company that offers access to fine art through the securitization of masterpieces.
Fees & Commissions
Alto currently offers two subscription packages. The Starter package costs $10 per month or $100 per year and it offers investors access to all investment vehicles supported by the platform.
With the Starter package, investors can only access investment opportunities by partnering with another 25 or more investors.
Meanwhile, the Pro package, which costs $25 per month or $250 per year, gives investors the possibility of flying solo, which means participating in a deal without involving other partners.
Other fees include a partner investment fee going from $10 to $50 depending on the third-party provider involved in the transaction and a $75 private investment fee if the client prefers to participate in a deal without involving other investors.
Additionally, clients can enroll for a feature called Checkbook+, which allows them to write checks supported by the funds held within their IRA. There is a one-time setup fee of $500 for enrolling.
Founded in 2018, Rocket Dollar is a self-directed IRA provider that allows investors to put their money into anything they want as long as it qualifies as an investment according to the IRS.
The menu of options offered by Rocket Dollar is quite ample and includes peer-to-peer lending, conventional loans, and equity investments such as venture capital.
- No minimum deposit is required to open an account
- Rocket Dollar offers transparent pricing as it works as a subscription-sub service.
- The set-up fee includes an LLC opened on behalf of the investor.
- A strong network of partners that give investors access to interesting areas of investment including private debt and equity, cryptocurrencies, consumer goods, and venture capital
- An online dashboard is available to keep track of the performance of the portfolio.
- No custodian approval required when extending checks supported by the IRA
What We Like About Rocket Dollar
Rocket Dollar has partnered with a wide range of top-tier firms that offer access to alternative investment as is the case of Gemini (cryptocurrencies), Farm Fundr (specialty crops), One Gold (precious metals), and Farm Together (farming land).
Fees & Commissions
Investors can sign up for two different packages if they choose to open a self-directed IRA with Rocket Dollar.
The Core package costs $15 per month along with a $360 one-time setup fee. This package includes the incorporation of a limited liability company (LLC) opened on behalf of the client to hold the investments made through the IRA. It also includes multiple interesting features such as online document storage, an online dashboard, and customer support via e-mail.
Meanwhile, the Gold package costs $30 per month along with a $600 one-time setup fee. This package gives investors access to all the features offered by the Core option while adding the possibility of making four free wire transfers per year, access to priority customer support, and a physical debit card backed by the funds held in the IRA.
Strata Trust Company
With over $2 billion in assets under custody and more than 35,000 investors under its wing, the Strata Trust Company is a provider to consider when opening a self-directed IRA in the US.
Along with providing access to traditional instruments like stocks, bonds, and exchange-traded funds (ETFs), Strata enlarges the universe of possibilities for investors by introducing them to the world of private debt, structured settlements, private equity, and crowdfunding to help them in diversifying their investment portfolios via alternative vehicles.
- Strata is a wholly-owned subsidiary of Indiana-based Horizon Bank, which provides the firm with an extra level of credibility.
- Ample portfolio of available alternative investment opportunities, including gold and precious metals, crowdfunding, private equity funds, and real estate
- Low account setup and annual fees
What We Like About Strata Trust Company
The fact that Strata is backed by a bank should not be taken lightly as providers of self-directed IRAs are not FDIC-insured entities.
Ss a wholly-owned subsidiary of Horizon Bank – a financial institution with nearly $6 billion in assets and solid capital ratios – Strata has a strong balance sheet to fall back on during times of financial distress.
Fees & Commissions
For Basic IRAs, Strata charges an annual account fee of $125 and a one-time setup fee of $50. This account allows investors to invest in financial instruments (stocks, bonds, ETFs), REITs, debt offerings, and other publicly registered products.
Meanwhile, the Flexible IRA charges a higher $300 annual account fee and a one-time $50 setup fee while giving investors the alternative of participating in private equity placements and real estate offerings along with other alternative investments supported by Strata.
Finally, Strata offers a Precious Metal IRA account that charges an annual account fee of $95 and a one-time setup fee of $50 for those who would like to invest in IRA-approved gold, silver, platinum, or palladium coins or bullion.
The Entrust Group
The Entrust Group is an Oakland-based self-directed IRA custodian that currently oversees over $4 billion in assets for its clients while having more than 40 years of experience in the asset management and retirement planning industry.
Over 22,000 investors currently entrust their alternative investments to this company and that makes it a strong player in the industry and one that we must consider when drafting a review on the best self-directed IRA providers.
- Ample portfolio of alternative investments, including secured and unsecured corporate debt, real estate, precious metals, and private placements
- Strong team of seasoned retirement planning professionals who can provide guidance on the best alternative investments to consider based on the client’s financial goals, risk tolerance, and net worth
- Large database of educational materials for investors seeking to learn more about the different investment vehicles offered by the firm
What We Like About the Entrust Group
One of the most interesting offerings currently presented by The Entrust Group is its Green IRA, which is an account devoted to investing in renewable sources of energy including solar, biofuel, and energy-efficient housing solutions.
For investors seeking to build socially conscious portfolios, Entrust can be among the top choice to obtain access to opportunities in early-stage startups and project financing.
Fees & Commissions
Entrust fees start with a one-time account establishment fee of $50. Moreover, investors have two ways to pay for the firm’s service fees:
- Pay a fixed amount per asset in the account starting at $199 per asset for non-recourse loans while other alternative assets (excluding precious metals and crowdfunding) generate a $299 annual fee per asset charged quarterly
- Pay a percentage fee on the value of the assets held within the self-directed IRA, starting at 0.95% for accounts with a balance lower than $24,999 while the maximum amount to be paid annually would be $1,995 regardless of the balance of the account
Other costs include one-time fees incurred when purchasing, selling, or exchanging different assets through the firm, going from $95 to $250 depending on the asset.
Founded by industry professional Adam Bergman, IRA Financial helps individuals all across the United States build diversified retirement portfolios that incorporate alternative investments such as real estate, hedge funds, private equity funds, and even cryptocurrencies.
In a relatively short period, IRA Financial has grown to become a $4.6 billion powerhouse in the self-directed IRA custodial industry, currently serving more than 16,000 clients by offering access to a wide range of investment alternatives.
- The firm offers two service packages that include a custodian-controlled account and a checkbook-controlled account.
- Ample portfolio of investment alternatives including private placements, real estate, precious metal, and even cryptocurrencies with the assistance of Gemini
- Competitive pricing and straightforward fee structure
- Clients can take full control of their self-directed IRA by setting up a special-purpose LLC.
- Funds from other accounts can be rolled over to IRA Financial for free.
What We Like About IRA Financial
Certain firms charge high fees for rolling over accounts from other providers. By waiving those charges, IRA Financial is saving clients money that they can use to keep investing in the company’s ample portfolio of alternative asset classes.
Fees & Commissions
For the Self-Directed IRA LLC package, which is a checkbook-controlled account, there is a one-time setup fee of $999 and a $300 annual fee. This package gives investors access to a one-year free compliance service and IRA Financial will handle all the required IRS reporting and administration paperwork.
Meanwhile, the basic Self-Directed IRA package costs $300 per year and has no setup fee although it limits investors in terms of how they can deploy the funds held within the account.
uDirect is on a mission to educate investors about the wide range of possibilities resulting from investing in alternative asset classes since its founder – Kaaren Hall – found that only 4% of US investors have a self-directed IRA.
A former Bank of America industry specialist, Hall went on to found uDirect to help individuals in building sizable retirement funds by accessing alternative investments including real estate, land, managed futures, private placements, and gold.
- The portfolio of investments offered by uDirect is one of the largest advertised and it includes equipment leasing, factoring investments, tax liens, oil and gas investments, and promissory notes.
- The company is a member of the Retirement Industry Trust Association (RITA).
- Setup fees are in line with the industry’s average while annual fees are below average.
What We Like About uDirect IRA
The wide range of investment alternatives offered by uDirect IRA makes it a strong option to consider as investors from different corners can benefit from exposing their capital to the vehicles they understand the best.
Oil professionals can, for example, take advantage of investment opportunities in the oil & gas sector while lawyers and venture capitalists can focus on judgment or structure settlements and private equity placements.
Additionally, the firm offers to waive six transaction fees applicable to distribution, withdrawal, acquisitions, and other asset-related transactions. After that, these transactions generate a $35 fee.
Fees & Commissions
There is a one-time setup fee of $50 charged by uDirect IRA to open an account while a minimum account balance of $325 is required. Meanwhile, there is an annual fee of $275 per year.
Other fees include a $25 transfer fee (the first siz are free), and partial and complete IRA termination fees of $75 and $175 respectively. Storage fees apply for gold purchases.
The recent rise in the popularity of cryptocurrencies has prompted investors to seek ways to get exposure to the market through safe providers.
Meanwhile, given the strong volatility of these innovative financial instruments, most traditional providers have not yet included the possibility of investing in Bitcoin (BTC) and other cryptocurrencies for IRA holders.
In response to this need, a team headed by Colombian entrepreneur Camilo Concha founded Bitcoin IRA, a company that offers exposure to a limited selection of cryptocurrencies with the added advantage that you won’t have to pay taxes immediately on your crypto gains. Read our full Bitcoin IRA review to learn more.
- Access to multiple cryptocurrencies including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic
- Bitcoin IRA enables clients to earn interest on their cryptocurrency holdings.
- Strong security protocols and 100% offline cold storage of digital assets
- The firm holds a $100 million custody insurance provided by BitGo.
- Phone support is available for clients.
What We Like About Bitcoin IRA
The fact that people think about Bitcoin as gold 2.0 creates the false notion that it is not possible to earn interest on your holdings.
This is an advantage of opening a self-directed IRA with Bitcoin IRA since the company offers a 2%+ APY on a limited selection of coins (Bitcoin and Ethereum for now) while it also offers a 6% APY on your cash holdings.
This interest is paid every month and there is no lockup period, which means that you can choose when to start and when to stop lending your holdings at your convenience.
Fees & Commissions
The fees charged by Bitcoin IRA are not as straightforward as those of other self-directed IRA providers on this list. However, the firm’s estimates point to a 5% annual management fee.
With $18 billion in assets under custody, Choice has become the go-to provider for cryptocurrency investors who prefer to earn tax-deferred gains on their holdings while resting assured that their assets are well protected.
Choice currently powers over 125,000 clients while offering investors competitive pricing for the possibility of accessing a wide range of financial instruments with the assistance of top-notch brokers such as Interactive Brokers and Kraken.
- Access to a wide range of traditional financial assets such as stocks, exchange-traded funds (ETF), and certain alternative investments including cryptocurrencies
- Trading platform powered by Interactive Brokers (traditional assets) and Kraken (cryptos)
- Low-fee service that includes advanced custodial solutions for digital assets
What We Like About Choice
Investors have struggled for years to find a way to hold Bitcoin and other cryptocurrencies safely. Choice provides one of the best vehicles for doing just that as you can enjoy the service of a regulated custodian while having the possibility of deferring the tax bill of your crypto gains until you retire.
Meanwhile, if you are perhaps more concerned about the security of your crypto assets, you can always choose to sign up for the firm’s digital asset custody, which is program provided by Fidelity Digital Assets®.
Fees & Commissions
With Choice, investors can pick between three different plans. The first two packages don’t charge any setup fee or annual account fee. However, they charge a $0.005 per share fee for trading stocks and other instruments through the Interactive Brokers’ platform.
Meanwhile, when it comes to digital assets, users can choose to either let their Bitcoin holdings sit in a wallet for free or they can opt for the cold storage program provided by Fidelity, which generates a 1% annual fee on the value of your Bitcoin holdings.
Finally, investors can also choose to store Bitcoin by themselves through storage solution firm Casa. In this case, setup fees and annual account fees vary depending on the account balance.
FAQs About the Best Self-Directed IRA Providers
Now that you have gotten to know our favorite providers of self-directed IRAs, you may have some questions about how these accounts work and how they are different from traditional IRAs.
We have compiled a list of answers to the most frequently asked questions (FAQs) to help you in deciding if this is the kind of account that suits your retirement plans the best.
What Is a Self-Directed IRA?
Same as a traditional IRA, a self-directed IRA is an account specifically designed for retirement purposes. It allows individuals to defer the gains obtained on their investments.
However, self-directed IRAs allow investors to put their money into alternative asset classes, which are financial vehicles or instruments whose characteristics are more complex than traditional asset classes such as stocks, bonds, or exchange-traded funds (ETF).
The purpose of a self-directed IRA is to further diversify an investor’s retirement portfolio by gaining exposure to alternative investments including real estate, private equity placements, and precious metals.
How Does a Self-Directed IRA Account Work?
Companies can play two different roles when offering a self-directed IRA. First, they can act as custodians, which means that the assets bought by the investor are held in a trust and the investor cannot benefit from any of the gains obtained as a result of the IRA’s operations immediately – only the IRA will receive the proceeds.
Meanwhile, a company can act solely as a broker, in which case the investor has to form a limited liability company (LLC) that holds the assets purchased by the IRA to avoid the disposition of the funds into other activities that could violate the limitations imposed by the IRS.
Pros of Self-Directed IRAs
- Expand the number of asset classes that investors can incorporate into their retirement portfolios to further diversify their holdings.
- Gains are not taxed immediately, which allows the holder to dramatically improve the return’s obtained on his/her investments by reinvesting these tax savings during the accumulation stage.
- Custodians often offer compliance and due diligence services that allow the investor to ensure the legitimacy of the assets he/she invests in.
- Individuals can contribute a total of $6,000 per year to a self-directed IRA.
- The existence of multiple service providers helps in bringing fees and commissions down, which benefits investors via lower transaction and account management costs.
Cons of Self-Directed IRAs
- Same as with traditional IRAs, withdrawing money before reaching retirement age generates a penalty and results in the taxation of any gains made on the investments.
- Alternative investments are usually best suited for sophisticated investors who understand the intricacies of asset valuations. There is a risk that an investor can lose all his money by failing to diversify his holdings appropriately or by misjudging the quality of a certain asset when entering an alternative investment.
- Fee structures are usually more complicated than those of traditional brokers dealing with traditional financial assets.
- Certain transactions and investments are prohibited for self-directed IRAs.
- Investors face the risk of liquidation and immediate taxation in case they breach the IRS rules.
How to Choose the Best Self-Directed IRA Provider
It’s not surprising that there are many more self-directed IRA providers in the market these days. That is why we wanted to assist you in the process of picking the best custodian/broker for you by shortlisting your list of potential candidates.
That said, how can you narrow down that list to just one?
First, you should analyze their fee structure to estimate the costs you will incur when investing. This includes assessing the impact of one-time fees, annual management fees, and transaction fees.
Additionally, you’ll probably want to either choose the provider that offers the largest portfolio of assets for you to invest or you could also pick a custodian that specializes in the asset you would like to focus on – i.e., real estate, cryptocurrencies, private placements.
Moreover, it is important to conduct thorough due diligence on your prospective broker to make sure the company is a regulated entity. Browse the web to see if there are complaints from investors about the quality of their service, fees, or any other issues.
Finally, alternative investments are often complex instruments, and investing in them involves going through a lot of paperwork, conducting due diligence, and ensuring you understand the risks involved in each operation.
With that in mind, the quality of customer service provided by your self-directed IRA provider will play a crucial role in making the experience of investing in alternative assets much more comfortable and rewarding for you.
Now that you have this shorter list of candidates for opening a self-directed IRA, are you prepared to take the level of diversification of your retirement portfolio to the next level?
Give it another read in case you still have some questions and make sure you are satisfied with the services, portfolio of available assets, and fees offered by the provider you go with.
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Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and has also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.